Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
To increase production costs for firms
B
To encourage the consumption of goods that have beneficial effects on society
C
To reduce the overall tax revenue of the government
D
To eliminate competition in the market
Understanding the Answer
Let's break down why this is correct
Answer
The primary purpose of government subsidies aimed at positive externalities is to encourage activities that have benefits for society but might not be profitable for businesses on their own. Positive externalities are the good effects that spill over to others when a person or company engages in an activity, like when a farmer plants trees that improve air quality for everyone nearby. By providing financial support, the government helps make these beneficial activities more appealing and affordable, leading to greater overall well-being. For example, if the government gives subsidies to companies that invest in renewable energy, more businesses will switch to cleaner energy sources, reducing pollution and benefiting the environment. Ultimately, these subsidies aim to create a healthier, more sustainable society by promoting actions that help everyone, not just the individual or business involved.
Detailed Explanation
Subsidies help make good things cheaper. Other options are incorrect because Some might think subsidies raise costs for companies; It's a common mistake to think subsidies reduce tax money.
Key Concepts
government intervention
Topic
Subsidies for Positive Externalities
Difficulty
easy level question
Cognitive Level
understand
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